13 October 2017
Market snapshot
Equities - India
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Commodities
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56
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Cu (US$/MT)
6,861
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Almn (US$/MT)
2,122
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Currency
Close
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USD/INR
65.1
-0.1
USD/EUR
1.2
0.3
USD/JPY
112.3
0.0
YIELD (%)
Close
1MChg
10 Yrs G-Sec
6.8
0.0
10 Yrs AAA Corp
7.6
0.0
Flows (USD b)
11-Oct
MTD
FIIs
-0.1
-0.5
DIIs
0.1
1.0
Volumes (INRb)
11-Oct
MTD*
Cash
310
300
F&O
11,282
5,986
Note: YTD is calendar year, *Avg
YTD.%
20.9
23.3
30.2
YTD.%
13.9
22.4
5.8
13.1
22.4
9.6
YTD.%
1.6
11.7
24.2
24.5
YTD.%
-4.1
12.4
-4.1
YTDchg
0.2
0.1
YTD
4.7
10.8
YTD*
294
5,447
Today’s top research idea
TCS - Sluggish revenue growth (marginal miss)
v
TCS' 1.7% QoQ CC revenue growth (estimate of 2.2%) was marginally below our
estimate, led by 150bp QoQ realization drop (fell for the second consecutive
quarter). YoY CC growth remains at 6.9%. BFSI (4.7% YoY CC), Retail (-1.7% YoY
CC) and US (3.6% YoY CC) continue to remain weak.
v
EBIT margin expansion of 170bp QoQ to 25.1% was a positive surprise (estimate
of 80bp expansion). The expansion in margins was contributed by favorable
currency movement and overall improvement in operational efficiencies and
cost rationalization.
v
The management cited trends such as second digital wave in BFS and offline
retailers' return to the battlefield as potential positives, even though it remains
uncertain when these may culminate into accelerated growth.
Research covered
Cos/Sector
EcoScope
TCS
IndusInd Bank
Ajanta Pharma
Cyient
Strategy
Bharti Airtel
Healthcare
Results Expectation
Key Highlights
September inflation unchanged, August IIP surprises on the upside
Sluggish revenue growth (marginal miss)
Steady quarter; earnings visibility remains strong
Global Fund allocation to drive anti-malaria business
Both engines firing
Embarking on a new era of corporate governance
Bharti announces acquisition of TTSL – a strategic move
Brace for faster approval and more competition
MCX | Reliance Inds.
Piping hot news
Airtel to buy Tata’s consumer mobile business in a debt-free, cash-free deal
v
Tata Sons Ltd will sell its consumer mobile business to India’s largest telecom
operator Bharti Airtel Ltd virtually for free,…
Chart of the Day: EcoScope - September inflation unchanged
Retail inflation unchanged at 3.3% in Sep 2017
IIP growth at 11-month high in August 2017 (% YoY)
* Excluding F&B and F&L Source: Central Statistics Office, MOSL
Source: CSO, MOSL
Research Team (Gautam.Duggad@MotilalOswal.com)
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.

In the news today
Kindly click on textbox for the detailed news link
1
India’s factory output rebounded
strongly to a nine-month high of
4.3% in August as companies
stepped up production to restock
warehouses ahead of the festival
season,…
2
SIP inflows grow 50% in one year
Inflow into mutual funds (MFs) through systematic investment plans (SIPs)
has hit another historic high in September. The sector collected Rs 5,516
crore during the month as the number of SIP accounts touched 16.6
million, compared with 13.5 million at the beginning of this financial year.
A year before, the sector got less than Rs 3,700 crore. In a year, SIP
monthly contribution has increased by about 50%. According to sector
officials, every month Rs 250-300 crore worth SIPs were added and this
trend would continue…
India’s IIP in August highest in
9 months, inflation unchanged
3
Top auto executives named in
disqualified directors list, win
Delhi HC relief
A group of senior executives in big
automakers approached the Delhi
high court for relief after finding
themselves in the list of directors
disqualified by the ministry of
corporate affairs (MCA). The court
stayed the MCA directive in an
interim order on Tuesday…
4
Bank provisions against NPAs
to rise to Rs3.3 trillion in 2017-
18: Crisil
Banks may need to set aside as
much as Rs3.3 trillion as provisions
in 2017-18 to cover for large
corporate loans turned bad, a
move which could lead to huge
losses, said a report from Crisil
Ratings…
5
The aviation industry will take a
annual hit of ₹5,700 crore
following the implementation of
the Goods and Services Tax (GST),
domestic airlines told the Finance
Ministry recently. The Federation
of Indian Airlines (FIA), which
represents IndiGo, SpiceJet, Jet
Airways and GoAir, made a
presentation before top Finance
Ministry officials on September 27
on behalf of the entire airline
industry, saying guideline
principles of the new indirect
system — revenue neutrality and
equity — have been violated by
the GST…
‘GST to hit aviation sector by
₹5,700 cr. a year’
6
Banks weigh tier-I bond sales
to strengthen capital base
Banks are planning to sell Basel-III
compliant additional tier-I bonds
(AT-1) in a bid to strengthen their
capital base, at a time when
investors’ appetite for such
instruments is lower because of
prevailing asset quality issues…
7
Locked in a tussle with the Delhi
airport over allocation of space,
IndiGo has now written to rival
low fare carrier Spice-Jet
requesting the latter to share its
domestic operations with Go Air in
one terminal while IndiGo takes
the other for itself…
IndiGo seeks SpiceJet support
on Delhi airport terminal issue
13 October 2017
2

E
CO
S
COPE
The Economy Observer
12 October 2017
September inflation unchanged, August IIP surprises on the upside
Still some room for a rate cut given downside risks to RBI’s growth projections
n
CPI inflation remained unchanged MoM at 3.3% in September 2017. This was marginally higher than our expectation of
3.2%, but lower than market consensus of 3.6%.
Food inflation eased slightly to 1.3% in September 2017, while core inflation touched a six-month high of 4.6%. The
uptick in core inflation was largely on account of a surge in housing inflation.
Furthermore, the index of industrial production (IIP) grew 4.3% YoY in August, exceeding our/consensus estimate of
2.4%/2.6%. A recovery was observed in manufacturing, along with a surge in mining activity and electricity generation.
We expect headline inflation for 2HFY18 to remain in line with the RBI’s projections, but also see some downside risks.
Hence, we believe that there is still some room to cut interest rates.
n
n
n
I. Retail inflation unchanged at 3.3% in September
n
n
n
n
n
CPI inflation unchanged at 3.3%:
CPI-based inflation remained unchanged MoM
at 3.3% YoY in September 2017
(Exhibit 1).
Although the number was marginally
higher than our expectation of 3.2%, it was below market consensus of 3.6%.
CPI inflation has come in lower than consensus estimates in five of the last six
months (it was higher than expected in August 2017).
Food inflation eases slightly…:
Food inflation eased to 1.3% in September from
1.5% in the preceding month. This was largely driven by a fall in vegetables
inflation to 3.9% from 6% in August 2017. On an MoM basis, vegetables prices
declined 7.1%, after rising by 34.2% over the last four months. Inflation in other
food items remained largely unchanged MoM in September.
…while core inflation touches six-month high…:
Core
inflation (all items
excluding ‘food & beverages’ and ‘fuel & light’) rose to a six-month high of 4.6%
in September from 4.4% in the preceding month (Exhibit
3).
This was the third
straight month of rise in core inflation. Core-core inflation (excluding
petrol/diesel from core inflation) too edged up to 4.4% from 4.2% in August.
…led by rise in housing inflation:
Uptick in both core and core-core inflation in
September can largely be ascribed to a rise in housing inflation, which touched a
three-year high of 6.1% (Aug’17: 5.6%) on account of implementation of 7
th
CPC
House Rent Allowance (HRA) hikes from August. Inflation in core services eased,
while that in goods remained unchanged in September (Exhibit
4).
Although headline inflation is expected to rise gradually in 2HFY18 on account
of an adverse base effect, it should remain in line with the RBI’s projections.
However, we believe that there are downside risks to the RBI’s growth
projections, leaving room for interest rate cuts.
13 October 2017
3

12 October 2017
Q2FY18 Results Update | Sector: Technology
TCS
BSE SENSEX
32,182
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm
Free float (%)
S&P CNX
10,096
TCS IN
Sluggish revenue growth (marginal miss)…
1,970
…but strong execution on margins
5,021.7 / 73.9
2,707 / 2,055
n
No pick-up in revenue momentum...:
TCS' 1.7% QoQ CC revenue growth was
marginally below our estimate of +2.2%, led by a 150bp QoQ realization drop
3/0/-8
3068.0
(fell for the second consecutive quarter). YoY CC growth remains at 6.9%. BFSI
26.4
(4.7% YoY CC), Retail (-1.7% YoY CC) and US (3.6% YoY CC) remain weak. As
CMP: INR2,549
TP: INR2,450(-4%)
Neutral
Financials & Valuations (INR b)
2017
2018E
2019E
Y/E Mar
Net Sales 1,179.7 1,235.3 1,377.0
323.1
327.6
369.3
EBITDA
262.9
257.7
289.8
PAT
133.4
131.8
151.4
EPS (INR)
8.3
-1.2
14.9
Gr. (%)
BV/Sh
448.3
418.2
486.3
(INR)
32.6
30.6
33.5
RoE (%)
32.4
26.8
26.0
RoCE (%)
19.1
19.3
16.8
P/E (x)
5.7
6.1
5.2
P/BV (x)
n
n
Estimate change
TP change
Rating change
n
TCS Quarterly Performance (IFRS)
Y/E March
Revenue (USD m)
QoQ (%)
Revenue (INR m)
YoY (%)
GPM (%)
SGA (%)
EBITDA
EBITDA Margin (%)
EBIT Ma rgi n (%)
Other i ncome
ETR (%)
PAT
QoQ (%)
YoY (%)
EPS (INR)
Headcount
CC QoQ rev gr (%)
Attri ti on (%)
E: MOSL Es ti ma tes
1Q
4,362
3.7
293,050
14.2
43.9
17.1
78,380
26.7
25.1
9,630
24.0
63,179
-0.4
10.7
32.1
362,079
3.1
13.6
Digital continues to grow, the timing of a turnaround in the weaker areas
remains hard to call, keeping our growth bets modest.
...but impressive execution on margins:
EBIT margin expansion of 170bp QoQ
(est. of +80bp) to 25.1% was a positive surprise. The expansion in margin was
contributed by multiple line items across COGS and SGA, and not by any single
driver. Execution was particularly impressive, considering the drop in
realization and the lack of growth support. However, the very factors will also
test the sustainability of this upward trajectory toward the aspired range of 26-
28%.
Addition to client buckets reflects prowess:
TCS saw healthy client additions
across its revenue buckets (USD1m+ to USD100m+), marking its ability to
continuously mine accounts, despite pressure in the legacy portfolio. However,
it is the discord with overall company growth that limits the extent of positivity
with which one may read the same. Management cited trends such as the
second digital wave in BFS and the offline retailers' return to the battlefield as
potential positives, even though it remains uncertain when these will culminate
into accelerated growth.
Lack of growth triggers to keep valuations range-bound:
Our 1-2% earnings
upgrade follows above-estimate margin performance by TCS. However,
continued low growth in its largest segments is deterrent to an investment
case at current valuations. Improvement in larger verticals, especially BFS, will
be key to rerating. We see a lack of triggers, especially given the uncertainty
around expectations of a revival of spend in the vertical. Maintain
Neutral.
FY17
FY18E
FY18E
2Q
3Q
4Q
4,739
4,782
4,862
17,575
18,974
3.2
0.9
1.7
6.2
8.0
305,410 313,229 320,866 1,179,660 1,235,346
4.3
5.3
8.2
8.6
4.7
43.6
44.2
44.5
44.5
43.8
16.9
17.3
17.3
17.1
17.3
81,640
84,354
87,499 323,110 327,613
26.7
26.9
27.3
27.4
26.5
25.1
25.3
25.6
25.7
24.9
8,120
6,319
8,070
41,890
31,829
23.7
23.7
23.7
23.6
23.8
64,460
65,045
68,750 262,899 257,705
8.4
0.9
5.7
-2.1
-4.0
4.0
8.6
-2.0
33.7
34.0
35.9
133.4
131.8
389,213 388,315 394,942 387,223 394,942
1.7
0.9
1.7
8.4
8.0
5.9
8.0
9.9
(INR Million)
Est. Var. (%
2QFY18 / bp)
4,739
0.0
3.2 -1bp
304,737
0.2
4.1 23bp
43.4 18bp
17.6
-72bp
78,720
3.7
25.8 90bp
24.2 91bp
10,260 -20.9
24.2 -42bp
63,594
1.4
7.0 146bp
-3.4 132bp
32.5
394,006
-1.2
3.2
5.9
FY17
2Q
3Q
4Q
1Q
4,374
4,387
4,452
4,591
0.3
0.3
1.5
3.1
292,840 297,350 296,420 295,840
7.8
8.7
4.2
1.0
44.8
44.5
45.0
42.8
17.1
16.8
17.6
17.8
81,110
82,290
81,330 74,120
27.7
27.7
27.4
25.1
26.0
26.0
25.7
23.4
10,520
11,850
9,890
9,320
23.8
23.6
23.1
24.2
65,860
67,780
66,080 59,450
4.2
2.9
-2.5
-10.0
8.8
10.9
4.2
-5.9
33.4
34.4
33.5
30.4
371,519 378,497 387,223 385,809
1.0
2.0
1.0
2.0
12.9
12.2
11.5
11.6
13 October 2017
4

12 October 2017
Q2FY18 Results Update | Sector: Financials - Banks
IndusInd Bank
Buy
BSE SENSEX
32,182
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm
Free float (%)
S&P CNX
10,096
IIB IN
595.8
1,037 / 15.9
1818 / 1038
-4/12/28
1589
85.0
CMP: INR1,743
n
TP: INR2,000 (+15%)
Steady quarter; earnings visibility remains strong
Financials & Valuations (INR b)
Y/E MARCH
2018E 2019E
NII
74.6
94.6
OP
66.7
84.8
NP
36.4
47.0
NIM (%)
4.2
4.2
EPS (INR)
60.9
78.6
EPS Gr. (%)
0.0
0.0
BV/Sh. (INR)
387 453.4
ABV/Sh. (INR)
371 436.4
RoE (%)
16.9
19.0
RoA (%)
1.8
1.9
P/E (X)
28.6
22.2
P/BV (X)
4.5
3.8
P/ABV (X)
4.7
4.0
2020E
120.8
108.7
60.3
4.2
100.8
0.0
539.5
521.0
20.6
1.9
17.3
3.2
3.3
IndusInd Bank’s (IIB) 2QFY18 PAT grew 25% YoY (in-line) to INR8.8b. Strong
loan growth of 24% YoY (+26% YoY in corporate loans) and a steady NIM of 4%
helped keep NII growth steady at 25% YoY.
n
Robust NII, coupled with steady fee income growth of 22% YoY, enabled the
bank to deliver impressive core PPoP growth of 28% YoY. Opex continues to
trail total income growth, as IIB sees improving productivity at its branches.
n
Both corporate (+26% YoY) and consumer (+22% YoY) loans exhibited healthy
growth. Vehicle loan growth recovered to 17% YoY, and was well supported by
~40% YoY growth in retail non-vehicle loans.
n
GNPA/NNPAs increased 6% sequentially; however NPA ratios remained stable.
Fresh slippages declined to INR4.98b (1.7% annualized, INR6.08b in 1QFY18),
led by relatively high slippages in the corporate segment. The bank indicated
that the impact of demonetization and NCLT referrals has resulted in relatively
high slippages over the past couple of quarters. Restructured book declined to
16bp of loans (INR1.94b), while O/s SR stood at INR4.07b. IIB mentioned that it
has provided INR360m toward six accounts that appear on the second list from
the RBI, and now carries ~65% provision on these accounts.
n
Other highlights:
(1) CASA ratio improved sharply to 42.3% (ahead of 40%
target), led by 95% YoY growth in SA deposits. (2) IIB has total exposure of
~INR3.85b toward six accounts that appear on the RBI’s second list. (3) IIB
expects INR1.5/share impact on EPS from fee income recognition changes
under Ind-AS.
Valuation and view:
IIB’s key focus is to scale up on its retail operations, led by a
higher share of non-vehicle retail loans by FY20. The bank is targeting 25-30% loan
growth, driven by continued branch expansion (by 800) and strong customer
acquisition (+2x to 20m). Potential merger with BHAFIN will strengthen the bank’s
liability profile and further boost return ratios. Maintain
Buy
with a revised TP of
INR2,000 (4.0x Sep’19 BV).
13 October 2017
5

Ajanta Pharma
BSE SENSEX
32,182
S&P CNX
10,096
12 October 2017
Update | Sector: Healthcare
CMP: INR1,156
TP: INR1,605 (+38%)
Buy
Global Fund allocation to drive anti-malaria business
n
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val ( INRm)/Vol m
Free float (%)
AJP IN
88.0
2150 / 1106
-3/-44/-55
101.6
1.6
302
29.3
Financials Snapshot (INR b)
Y/E Mar
2017 2018E 2019E
Net Sales
20.0
20.9
24.8
EBITDA
7.0
6.2
7.6
PAT
5.2
4.7
5.7
EPS (INR)
58.4
52.8
64.2
Gr. (%)
24.0
-9.7
21.8
BV/Sh (INR)
177.2 221.3 275.2
RoE (%)
37.7
26.5
25.9
RoCE (%)
36.4
26.1
25.6
P/E (x)
20.8
23.0
18.9
P/BV (x)
6.9
5.5
4.4
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Jun-17 Mar-17 Jun-16
73.8
2.2
11.6
12.4
73.8
2.1
10.9
13.2
73.8
2.2
9.9
14.2
n
With the Global Fund expected to award a tender for institutional anti-malaria (insti-
AM) medicines in the near term, we tried to analyze the probable impact on Ajanta
Pharma’s (AJP) business in the event of intensification in competition.
Ø
The companies prequalified by the World Health Organization (WHO) for the
institutional anti-malaria business from the Global Fund are the same as in the
previous tender process. However, we note that the reduction in the Global Fund
business to Ipca Laboratories (IPCA) due to US FDA regulatory restrictions has
provided business opportunities for other players, including AJP. In addition,
increased allocation by the Global Fund in 2015-17 drove strong growth for AJP.
Ø
Our scenario analysis indicates that the probable downside in AJP’s business if
competition intensifies due to the re-entry of IPCA in the institutional anti-
malaria business would be to the tune of INR400-450m, which amounts to 6% of
its Africa sales and 3% of overall sales. Although the amount committed by
donors has remained stable, the incremental business is subject to allocation by
the Global Fund.
On overall basis, we expect AJP to deliver a CAGR of 14% in revenue and 11% in
earnings over FY17-20. We value AJP at 25x FY19E EPS of INR64.2, maintaining our
price target to INR1,605 and also our Buy rating.
Global Fund – a key provider of insti-AM business
Tender award by the Global Fund holds immense significance in the insti-AM
segment. Notably, the Global Fund was the biggest contributor, with ~28% share in
total funding to agencies in 2015. The Global Fund spent ~USD9.9b over 2005-17,
which was utilized for 1) improving health systems (~59% of total spending), 2)
prevention (~24%) and 3) treatment (~17%). The spending for treatment in 2016 is
estimated at USD154m. Although the amount committed for 2017-19 is stable
compared to that in 2014-16, the business for pharma companies will be
dependent on how the Global Fund allocates the funds.
FII Includes depository receipts
Stock Performance (1-year)
Ajanta Pharma
Sensex - Rebased
2,550
2,150
1,750
1,350
950
Insti-AM business growth for AJP contingent on allocation and
competition
AJP has been one of the strong contenders for the insti-AM business over the past
five years. The company’s Africa business (includes insti-AM and branded generics)
exhibited a 27% CAGR over FY13-17, led by increased allocation by the Global
Fund, reduced business to IPCA, and robust growth in branded generics. However,
we expect growth in the Africa business to moderate in FY18 due to lower
allocation by the Global Fund and reduced industry growth in branded generics.
Growth in insti-AM for FY19 would depend on the quantum of tender awarded by
the Global Fund and the way the competitive landscape pans out.
13 October 2017
6

Valuation and view
Despite risks facing the Insti-AM business from a high base, we continue to like AJP
as the key long-term growth levers are intact. We expect AJP’s growth to trough in
FY18 (due to demonetization/GST hiccups in domestic formulation, lower allocation
by the Global Fund, and increased industry-wide pricing pressure for the US market).
We expect growth to recover in FY19 as it continues to outperform in the domestic
formulation market and enjoys a healthy product pipeline for the US market. We
expect AJP to deliver a CAGR of 14% in revenue and 11% in earnings over FY17-20.
We value AJP at 25x FY19E EPS of INR64.2. Maintain our price target of INR1,605
and reiterate
Buy.
Comparative valuation
Sector / Companies
Healthcare
Alembic Pharma
Alkem Lab
Ajanta Pharma
Aurobindo Pharma
Biocon
Cadila Health
Cipla
Divis Labs
Dr Reddy’ s Labs
Fortis Health
Glenmark Pharma
GSK Pharma
IPCA Labs.
Jubilant Life
Lupin
Sanofi India
Sun Pharma
Shilpa Medicare
Strides Shasun
Torrent Pharma
Sector Aggregate
503
1,832
1,155
742
344
501
585
864
2,387
150
611
2,437
528
653
1,028
4,063
514
584
857
1,247
Neutral
Neutral
Buy
Buy
Sell
Buy
Neutral
Neutral
Neutral
Buy
Neutral
Neutral
Neutral
Buy
Buy
Buy
Buy
Buy
Buy
Neutral
19.8
72.5
52.8
44.9
9.7
17.5
21.1
33.9
72.6
2.2
39.7
46.8
16.6
47.1
41.4
133.6
15.1
21.1
47.4
53.4
25.5
93.3
64.2
50.0
14.2
23.6
26.0
40.4
119.9
5.6
49.1
54.9
26.8
56.7
56.3
160.6
23.3
30.4
74.8
67.3
31.7
108.2
79.5
52.5
18.7
26.9
33.3
43.6
147.5
8.6
61.0
59.1
35.7
66.7
74.0
185.2
27.2
38.1
92.1
80.2
25.4
25.3
21.9
16.5
35.4
28.6
27.7
25.5
32.9
68.7
15.4
52.1
31.8
13.9
24.8
30.4
34.1
27.7
18.1
23.4
26.6
19.7
19.6
18.0
14.9
24.3
21.2
22.5
21.4
19.9
26.9
12.4
44.4
19.7
11.5
18.3
25.3
22.1
19.2
11.4
18.5
19.8
15.9
16.9
14.5
14.1
18.4
18.6
17.6
19.8
16.2
17.4
10.0
41.2
14.8
9.8
13.9
21.9
18.9
15.3
9.3
15.6
16.5
16.1
18.8
15.8
11.1
17.0
19.9
16.8
17.3
16.8
11.3
10.9
44.4
16.4
8.8
13.8
16.2
20.2
19.7
11.9
14.8
16.0
12.8
14.5
12.7
9.8
12.6
14.8
13.9
14.0
11.3
8.1
9.1
35.8
11.6
7.5
10.5
13.2
13.7
13.8
8.8
11.6
12.3
10.1
11.4
10.1
8.8
9.7
12.8
11.2
12.5
8.7
5.9
7.3
32.1
9.0
6.3
8.1
11.1
10.7
10.9
7.2
9.6
10.0
18.4
19.0
26.5
24.8
11.1
23.5
12.1
17.0
9.7
2.1
20.3
23.0
8.2
19.5
13.2
16.6
9.6
17.0
14.7
19.5
13.6
20.5
20.9
25.9
22.1
14.5
26.0
13.2
19.5
14.4
4.9
20.4
30.9
12.2
19.6
16.0
18.1
13.8
20.4
20.2
21.5
16.0
21.6
20.7
25.8
19.1
16.9
24.1
14.6
19.0
15.5
7.1
20.5
33.3
14.5
19.4
18.2
18.7
14.6
21.0
21.0
22.3
16.5
CMP
(INR)
RECO
EPS (INR)
PE (x)
EV/EBIDTA (x)
ROE (%)
FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E
13 October 2017
7

12 October 2017
Q2FY18 Results Update | Sector: Technology
Cyient
Buy
BSE SENSEX
32,182
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm
Free float (%)
S&P CNX
10,096
CYL IN
Both engines firing…
113
…on track to achieving double-digit growth in FY18
58.8 / 0.9
564 / 416
n
Strength in Services and DLM:
4.2% QoQ growth in Services and 34% QoQ
growth in Rangsons drove in-line revenue growth of 6.5% QoQ. Double-digit
-2/0/-6
growth expectations for FY18 get validated by the performance so far, placing
64.0
CYL strongly against peers. Robust revenue growth and improved operational
77.8
CMP: INR523
TP: INR600 (+15%)
Financials & Valuations (INR b)
2017 2018E 2019E
Y/E Mar
36.1
39.3
45.6
Net Sales
4.9
5.4
6.5
EBITDA
3.7
4.0
4.7
PAT
30.6
36.0
41.9
EPS (INR)
-0.2
17.6
16.2
Gr. (%)
188.7 207.4 229.2
BV/Sh (INR)
16.2
17.4
18.3
RoE (%)
15.9
16.4
17.4
RoCE (%)
16.9
14.4
12.4
P/E (x)
2.8
2.5
2.3
P/BV (x)
n
n
Estimate change
TP change
Rating change
n
efficiencies drove 160bp QoQ margin expansion to 14.6%, despite part wage
hikes and a flat INR. Operational beat and higher-than-expected other income
led to PAT of INR1.1b (+27.4% QoQ), a beat of 6%.
Laggards expected to pick up in 2HFY18:
Transportation, Communications and
Medical (37% of revenue) drove ~70% of sequential and YoY growth for CYL.
On the other hand, the Industrial, Semiconductor and Utilities & Geospatial
verticals continued to drag overall performance. Aerospace, which accounts for
35% of revenue, will be a critical determinant of the path going forward. This
vertical has seen its organic growth slowing down to 5% YoY in 2QFY18 from
10% in the year-ago period – this is attributed to a temporary slowdown in
UTC, which should revive toward 4Q of this year.
Order intake loses steam:
Order intake of USD119m declined 18% YoY.
However, on an LTM basis, growth stands at 14% YoY. Given its strong pipeline
and order backlog, CYL maintained its guidance of double-digit growth in
Services, 20% growth in Rangsons and 50bp margin expansion, all contributing
to double-digit earnings growth. Despite the beat, our numbers remain largely
unchanged due to lower other income (led by increased payout to 40%) and
absence of share of CYL’s profit from IASI post its sale.
Industry-leading growth coupled with long-term opportunities:
At current
momentum, we expect CYL to continue leading industry growth (~12% YoY CC
in FY18E), and over the longer term, it remains well placed to address
opportunities in the Engineering and Defense segments. Additionally, while
spend in the Aerospace industry has been changing, CYL has been successfully
transforming its offerings to maintain relevance to its customers and continue
growth. We see favorable risk-reward at 14.4/12.4x FY18/19E earnings. Our
price target of INR600 discounts FY19E earnings by 14x.
Buy.
13 October 2017
8

Strategy | 12 October 2016
Strategy
Key timelines
SEBI committee formed with
Mr. Uday Kotak as Chairperson
(June 2, 2017)
Embarking on a new era of corporate governance
SEBI Committee proposes a host of changes
The 23-member committee formed under the chairmanship of Mr Uday Kotak
submitted its 170-page recommendations report on ‘Corporate Governance in India’
to the Securities and Exchange Board of India (SEBI) on 5 October 2017. The
committee was formed with the objective of bridging the gap between the global
and Indian corporate governance standards. The report broadly tries to address five
key areas: (i) improving board effectiveness, (ii) bringing transparency in disclosure
of related-party transactions, (iii) elevating accounting and audit practices, (iv)
improving disclosure standards and (v) Judicious method in exercising the voting
rights. Further, the committee has proposed a transition window, between 2018-
2020, which would give the board’s adequate time to effect phased implementation
of the recommendations.
Committee conducts 12 meetings
(June 14, 2017-September 29,
2017
SEBI releases committee
recommendations for public
comments
(October 5, 2017)
Key takeaways
The committee recommendations contained comprehensive detailing on each
aspect of governance; however, there were 5 broad themes that were highlighted.
Few points, that stood out for us, within these themes have been listed below:
Last date for sending comments
for recommendations
(November 4, 2017)
1. Board effectiveness
n
Five broad themes
Improving board effectiveness
Bringing transparency in
disclosure of related-party
transactions
Elevating accounting
and audit practices
Listed companies are required to have at least six directors on the board, with a
minimum of 50% representation of independent directors — including one
woman director. According to the Companies Act 2013, currently, a minimum of
three directors are required on the board of a public limited company.
n
The committee has proposed (i) disclosure of the expertise of the directors being
appointed, (ii) increasing the number of board meetings from four to five every
year and (iii) capping the maximum number of directorships to seven by April
2020.
n
Starting April 2020, companies with a public shareholding of 40% or more will
need to separate the roles of chairperson and CEO, and appoint a non-executive
chairperson in order to prevent excessive concentration of power in one
individual.
n
Boards must meet more often, and disclose if they refuse to accept any of the
recommendations of audit or remuneration committees.
2. Related-party transactions
Improving disclosure standards
n
n
Judicious method in
exercising voting rights
Disclosure of related-party transactions (RPT) to be made on half yearly basis.
ARs to disclose RPTs with entities holding 10% or more in the company.
Definition of ‘related party’ will be made stricter to prevent darling deals from
going undetected.
13 October 2017
9

3. Accounting and audit practices
n
n
n
Audit committees to monitor the flow of funds to unlisted subsidiaries, including
those established overseas, while listed entities should put in place proper
regulatory framework.
Auditors to have the right to seek independent opinion in case of conflicting
views about the company.
Total fees for all services paid by the group to the auditor and its network firms
to be disclosed.
4. Disclosure and transparency
n
n
n
n
n
Enhanced disclosure requirements related to abrupt resignation of independent
directors and auditors should be put in place.
Transparent framework to regulate the information rights of certain promoters
and significant shareholders to prevent any abuse and unlawful exchange of
unpublished price sensitive information (UPSI). The committee proposed a
formal signing of the ‘Access to Information Agreement,’ which will cover terms
of information sharing.
Listed entities to disclose details of such holders of global depository receipts
who hold more than 1% shareholding of an entity to the stock exchange as part
of the disclosure on shareholding pattern on a quarterly basis.
Disclosures made by the listed entity on its website and submitted to the stock
exchanges should be in a searchable format that allows users to find relevant
information easily. Specifically, all disclosures made to the stock exchanges by
listed entities should be in XBRL format.
Listed entity may be required to disclose all credit ratings obtained by the entity
for all its outstanding instruments annually to stock exchanges and also on its
website which shall be updated on a regular basis as and when there is any
change. In addition, the SEBI may consider requiring the credit rating agencies
and the stock exchanges to set up a mechanism by which the ratings may be
sent directly from the credit rating agencies to the stock exchanges.
5. Judicious method in exercising voting rights
n
n
n
Live one-way webcasts of all shareholder meetings to be mandatory for top 100
companies (based on market capitalization).
No voting rights attached to treasury stock shall be exercisable after three years.
The committee recommends that a common stewardship code be created for
the financial sector on the lines of global best practices.
13 October 2017
10

12 October 2017
Bharti Airtel
BSE SENSEX
32,182
S&P CNX
10,096
Update | Sector: Telecom
CMP: INR400
TP: INR470(+18%)
Buy
Bharti announces acquisition of TTSL – a strategic move
Deal highly in favor of Bharti, in our view
§
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val, INRm
Free float (%)
BHARTI IN
3,997.3
438 / 284
-1/8/12
1,599.1
24.6
1432
32.9
§
Financials Snapshot (INR b)
2017 2018E
Y/E Mar
Net Sales
954.7 878.8
EBITDA
353.3 307.3
PAT
44.4
9.6
EPS (INR)
11.1
2.4
Gr. (%)
-6.4 -78.4
BV/Sh (INR)
168.8 169.9
RoE (%)
6.7
1.4
RoCE (%)
5.4
3.0
P/E (x)
36.0 167.0
P/BV (x)
2.4
2.4
EV/EBITDA (x)
7.5
8.5
2019E
944.6
330.1
12.8
3.2
33.8
171.9
1.9
3.2
124.8
2.3
7.7
§
Bharti Airtel (BHARTI) has announced the acquisition of Tata Teleservices'
(TTSL) consumer telecom business at a potential EV of INR20b (as per media
sources). The deal implies EV/sales of meager 0.2x. The move is expected to
expand Bharti's gross revenue market share to ~39% and subscriber market
share to 30%.
The acquisition will allow BHARTI to further strengthen its spectrum
portfolio by adding 71.3mhz of liberalized spectrum (40%) in the 2,100mhz
and 1,800mhz bands (also adds 2nd and 3rd carrier spectrum). We believe
the company may not retain the rest of the administered spectrum (60%),
which is valid for meager 2-3 years (expiry in 2021), restricting capex.
Our workings indicate potential EBITDA of INR30b from the TTSL acquisition
in 2-3 years, which is ~9% of BHARTI's consolidated EBITDA. At 7x
EV/EBITDA, it offers potential upside of 12%. We remain positive on BHARTI,
with a target price of INR470.
Revenue market share to increase 5% at EV of INR20b (EV/sales of 0.2x)
BHARTI announced the acquisition of TTSL’s consumer business at a meager
enterprise value of ~INR20b (as per media sources). This reflects the diminishing
bargaining power of sellers in the ongoing telecom sector consolidation. The deal
implies just 25% deferred spectrum payment liability taken by BHARTI out of the
total deferred payment liability of INR82b. According to TRAI data, TTSL’s
annualized revenue stood at INR88.7b (annualized 1QFY18 numbers), with a 5%
gross revenue market share (6.1% AGR market share). TTSL has 35m VLR
subscribers, with a 3.5% subscriber market share. The deal implies meager
EV/sales of 0.2x. Even if we assume revenue loss of 25% due to the CDMA
shutdown and the loss of second SIM usage (of TTSL), the deal should allow
BHARTI to increase its gross revenue market share to 38% (AGR market share to
~40%). This could allow the company to retain its leadership position, considering
Vodafone-Idea may lose 300-400bp market share in the ongoing merger process.
Shareholding pattern (%)
As On
Jun-17 Mar-17 Jun-16
Promoter
67.1
67.1
66.8
DII
10.3
11.2
10.5
FII
16.2
15.3
16.4
Others
6.4
6.5
6.4
FII Includes depository receipts
Stock Performance (1-year)
Bharti Airtel
Sensex - Rebased
435
395
355
315
275
Will gain attractive 71mhz of liberalized spectrum largely in 2,100mhz
band
TTSL holds 71.3mhz of liberalized spectrum out of the total 178.5mhz spectrum
(i.e. 40% of total spectrum). Of this, 45mhz (80% of liberalized spectrum) is in the
2,100mhz band, providing BHARTI multiple carriers in the 2,100mhz band in 9 out
of the 22 circles. Additionally, it will get 5mhz block in three key circles – Mumbai,
AP and Maharashtra. This will increase its holding to 2, 3 and 4 blocks in Mumbai,
AP and Maharashtra, respectively, in the attractive 1,800mhz spectrum. Out of
rest of the spectrum, nearly 60% is in the attractive 1,800mhz band. However, we
believe that there is limited benefit in liberalizing the rest of the spectrum (by
paying proportionate auction price), as it would be expiring in 2021.
13 October 2017
11

Expect EBITDA of INR30b with a margin of 45%
We understand that TTSL remains loss-making at EBITDA level, which could be
largely due to sub-optimal network utilization having network cost at 30-35%
(~50,000 cell sites and a bloated fixed-cost structure). Assuming BHARTI would lose
25% market share due to the potential CDMA shutdown and the loss of second SIM
usage (of TTSL), our workings indicate that it can potentially garner 45% EBITDA
margin, with EBITDA of INR30b in the 2-3 years of business integration. This will be
primarily driven by three factors: (1) BHARTI’s robust network should allow it to
reduce network cost by ~80%, including IRU (indefeasible right to use) toward TTSL’s
fiber optic usage. (2) BHARTI should be able to completely curtail TTSL’s bloated
fixed costs, including employee cost. (3) We expect access cost to reduce by 500bp
on the back of the lower IUC rate and the offnet call proportion on BHARTI’s
network.
Deal offers potential upside of 12%; remain positive with TP of INR470
TTSL’s EBITDA of INR30b is 17% of BHARTI’s India wireless EBITDA and 9% of
consolidated EBITDA on FY19E. Assuming 7x EV/EBITDA, the potential enterprise
value gain from the TTSL deal is INR207b, i.e. about 8% on BHARTI’s current EV of
INR2,500b. With net debt of INR20b (deferred spectrum payment), the net equity
value works out to be INR187b, offering 12% potential upside on FY19E. We believe
the deal is significantly in favor of BHARTI for two reasons. (1) Improvement in the
revenue market share should translate into strong EBITDA contribution on the back
of operating synergies. (2) It should strengthen BHARTI’s 2,100mhz and 1,800mhz
spectrum portfolio in the key circles. We have not factored in the upside from the
deal as we await further clarity. We remain positive on BHARTI with an SOTP-based
TP of INR470, valuing India wireless and Africa operations at EV/EBITDA of 9x and
4x, respectively.
13 October 2017
12

Healthcare
Brace for faster approval and more competition
Guidance document focuses on expediting approval and launch process
n
Multiple review cycles required to obtain ANDA approval by the USFDA has
been one of the key concerns in the pharmaceutical industry as it delays the
approval process. More than 80% of the pending ANDAs have been issued at
least one review communication by the USFDA. Notably, around 1,800 ANDA
applications are back with the industry, awaiting resubmission to correct
deficiencies in the original ANDA filings. According to the USFDA, it takes around
four review cycles to approve an ANDA due to the deficiencies by the generic
drug sponsors. In the first week of Oct-17, the USFDA issued four guidance
documents to provide further visibility on the ANDA filing and approval process.
n
Guidance on amendments to ANDAs under GADUFA II:
The USFDA recently
issued a draft guidance document explaining how the review goals established
as part of GDUFA II apply to amendments to ANDAs and Patient Administration
Systems (PAS). The guidance explains that how the amendment submission may
affect the review goal dates. Under GDUFA I, amendments were classified into a
complex tier system. Although GDUFA II still depends on several common
factors (similar to GDUFA I), it will no longer subject them to a tier system. The
FDA has categorically mentioned in this recommendation that it will respond to
90% of the minor amendments to the ANDAs within three months of the
submission date, while major amendments may take 6-10 months.
n
Draft guidance to make complex generics approval process more efficient:
The
USFDA issued a guidance document describing an enhanced pathway for
discussion between the USFDA and the complex generic filer through product
development meetings (pre- and post-filing). Due to the challenging
requirements for complex generic products, cost of development and approval
timelines become a deterrent for prospective generic filers. Notably, in the plain
oral segment, generic penetration has reached ~80%, while in the complex areas
like derma, inhalations and long-acting injectable, generic penetration is only
10-40%. This guidance document outlines goals and criteria for accepting
product development, pre-submission and mid-review-cycle meetings.
n
Record approvals in FY17; trend expected to continue:
In FY17 (Sep-17 end),
the USFDA approved a record 763 ANDAs, exceeding the FY16 approvals of 651.
~26% of all approved generics were approved in the last four years. Given that
the USFDA in GDUFA II (FY18-22) is targeting a review cycle of 8-10 months,
approvals can increase even further. Also, in September 2017, a record 202
ANDAs were filed, compared to the monthly average of 107 in FY17. This could
be primarily because of the increase in GDUFA fees for ANDA filings from
October 2018 (to USD171,823 v/s USD70,480).
n
More competition expected going forward:
In GDUFA I (FY12-17), the USFDA
was expecting ~750 ANDA filings annually, but witnessed ~1,000. The enhanced
focus on the filing and approval process, coupled with the existing ANDA
backlog of >4,000, will lead to faster approvals, and thus, more competition.
This would mean that the base business will continue being under pressure due
to new competition. On the brighter side, this also provides visibility for the
Indian generic players to enter complex areas such as inhalation (LPC, CIPLA),
opthal (SUNP) and peptides (ARBP)
13 October 2017
Sector Update
13 October 2017
13

September 2017 Results Preview | Sector: Exchanges
MCX
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
MCX IN
51.0
53 / 1
1411 / 932
-2 / -17 / -32
n
CMP: INR1,048 TP: INR1,300 (+24%)
n
Buy
Total volumes at MCX traded during the quarter stood at
INR14.1t, up 17.0% QoQ and down 14.0% YoY.
Volumes at MCX have been severely impacted post
demonetization. Barring bullion, other commodities have been
seeing stability in the past few months. Gold volumes in 2QFY18
are down 38.7% YoY. However, volumes have seen a sharp
rebound on a sequential basis, growing by 12.0% YoY, which is an
encouraging sign.
Despite the volume decline of 14.0% YoY on MCX, our revenue
growth estimate stands at +8.3% YoY, given the fact that it took a
~25% price hike in late 2017.
Financial Snapshot (INR Billion)
Y/E March
2017 2018E 2019E 2020E
Sales
EBITDA
NP
EPS (INR)
EPS Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Dividend yield
53.7
7.0
31.6
0.3
46.2
6.3
27.0
0.4
37.3
5.6
21.5
0.5
29.9
4.8
17.0
0.6
24.7
2.8
1.7
13.5
6.8
13.9
14.1
19.5
27.6
3.2
2.0
15.7
16.2
14.4
14.5
23.1
31.3
3.9
2.5
19.4
23.8
15.8
16.0
21.7
35.7
4.8
3.1
24.3
24.8
17.3
17.3
19.9
n
103.0 115.1 130.3 149.8
Key things to watch for
Ø
Roadmap of the launch of Options
Ø
Expectations of volume revival
Ø
Pace of reforms under SEBI
Quarterly Performance
Sales
Q-o-Q Gr. (%)
Staff Costs
Other expenses
Depreciation
EBIT
Margins (%)
Other Income
PBT bef. Exceptional items
Tax
Rate (%)
PAT
Q-o-Q Gr. (%)
EPS (INR)
Total volumes (INR t)
Q-o-Q Gr. (%)
Y-o-Y Gr. (%)
E: MOSL Estimates
1Q
582
16.9
143
265
49
125
21.5
356
480
152
31.7
328
14.1
6.5
16.0
7.3
17.7
FY17
2Q
596
2.3
144
257
42
152
25.6
359
511
134
26.3
376
14.8
7.4
16.4
2.3
10.3
3Q
634
6.5
198
296
45
96
15.1
363
459
119
26.0
339
-9.9
6.7
13.9
-15.2
6.4
4Q
574
-9.5
160
335
49
30
5.2
295
325
106
32.6
219
-35.5
4.3
12.4
-10.3
-16.5
1Q
557
-3.0
162
297
54
44
8.0
353
396
99
25.0
297
35.9
5.8
12.0
-3.4
-24.8
FY18
2QE
645
15.9
164
306
54
121
18.8
372
493
123
25.0
370
24.4
7.2
14.1
17.0
-14.0
FY17
3QE
686
6.4
166
311
54
156
22.7
386
542
135
25.0
406
9.9
8.0
15.6
11.1
12.6
4QE
727
5.9
168
315
54
190
26.1
397
586
146
25.0
440
8.3
8.6
16.9
8.0
35.7
2,386
11.7
644
1,116
186
440
18.4
1,373
1,811
512
28.3
1,299
210.6
25.5
58.7
4.1
FY18E
2,615
9.6
661
1,130
215
610
23.3
1,507
2,115
504
23.8
1,611
27.6
31.6
58.6
-0.1
13 October 2017
14

September 2017 Results Preview | Sector: Oil & Gas
Reliance Industries
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
RIL IN
6502.0
5359 / 82
872 / 466
2 / 11 / 39
n
CMP: INR824
n
TP: INR938 (+14%)
Neutral
Financial snapshot (INR b)
y/e march
2017 2018E 2019E 2020E
Net Sales
EBITDA
Net Profit
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
EV/Sales (x)
17.1
1.8
14.7
2.6
15.1
1.6
10.9
1.8
13.2
1.4
8.8
1.3
12.1
1.3
7.8
1.2
2,420 3,198 3,723
433
314
48.3
14.6
464
11.6
9.1
13.3
516
356
54.7
13.2
513
11.7
10.0
14.4
565
407
62.6
14.4
569
12.1
10.7
14.4
3,828
572
443
68.1
8.8
630
11.9
10.6
14.4
n
n
n
We expect RIL to report GRM of USD12.6/bbl v/s USD11.7/bbl in
1QFY18 and USD10.1/bbl in 2QFY17. We model a premium of
USD4.3/bbl over benchmark GRM of USD8.3/bbl which is up +62%
YoY and +29% QoQ.
Petchem segment is expected to do better despite decline in HDPE
and LDPE delta, with RIL being an integrated player and strong
volume growth in the segment.
We expect RIL to report EBITDA of INR126.4b v/s INR115.8b in
1QFY18 and INR105.5b in 2QFY17.
We expect RIL to report standalone PAT of INR88.2b (+15% YoY and
+8% QoQ).
RIL trades at 13.2x FY19E adjusted EPS of INR62.6. Its new
refining/petchem projects are likely to add to earnings from
2HFY18/FY19, but the telecom business would be a drag on
profitability. Maintain Neutral.
Key issues to watch for
Ø
GRM.
Ø
Petchem margins.
Ø
Progress on core expansions.
Ø
Update on telecom venture.
(INR Million)
FY17
FY18E
4QE
912,631 2,420,250 3,197,768
35.9
3.8
32.1
777,291 1,987,690 2,681,833
135,339 432,560 515,935
14.8
17.9
16.1
27,456
84,650
99,492
9,355
27,230
35,944
24,558
87,090
87,295
123,087 407,770 467,795
27,079
93,520 103,331
22
23
22
96,008 314,250 364,464
17.8
14.6
16.0
10.5
13.0
11.4
17.5
11.0
280.0
3.0
70.1
11.0
315.3
8.1
69.8
11.6
324.7
10.5
Standalone - Quarterly Earning Model
Y/E March
Net Sales
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Adj PAT
YoY Change (%)
Margins (%)
Key Assumptions
Refining throughput (mmt)
GRM (USD/bbl)
Petchem EBITDA/tonne (USD/MT)
Petchem volumes (mmt)
E: MOSL Estimates
1Q
534,960
-18.7
426,790
108,170
20.2
19,500
9,240
20,330
99,760
24,280
24
75,480
19.5
14.1
16.8
11.5
303.8
1.9
FY17
2Q
3Q
595,770 618,060
-2.0
9.3
490,220 512,020
105,550 106,040
17.7
17.2
20,290 20,770
6,330
9,310
22,800 30,250
101,730 106,210
24,690 25,990
24
24
77,040 80,220
17.4
11.1
12.9
13.0
18.0
10.1
314.4
2.1
17.8
10.8
329.4
2.0
4Q
671,460
34.4
558,660
112,800
16.8
24,090
2,350
13,710
100,070
18,560
19
81,510
11.4
12.1
17.5
11.5
313.7
2.1
1Q
642,170
20.0
526,280
115,890
18.0
21,580
7,880
19,180
105,610
23,650
22
81,960
8.6
12.8
17.3
11.9
348.9
2.2
FY18E
2QE
3QE
737,250 905,717
23.7
46.5
610,803 767,458
126,447 138,258
17.2
15.3
23,000 27,456
9,355
9,355
19,000 24,558
113,092 126,006
24,880 27,721
22
22
88,212 98,284
14.5
22.5
12.0
10.9
17.5
12.6
370.0
2.3
17.5
11.0
300.0
3.0
13 October 2017
15

In conversation
1. LUPIN: Expect acquisitions to boost growth; several products
lined up for next year; Ramesh Swaminathan, CFO & ED
n
n
n
n
n
n
n
n
Infection impacts about 21 million people in America, there are about 6 billion
prescriptions. Have not decided on the price point as yet but could be between
USD 150-200 per prescription. Large market and looking at about USD 200
million.
Unique proposition because it is a single dose oral treatment which is
differentiated from anything else available in the market today. One of the
reasons for being fairly bullish about product. Product has ten years of exclusive
exclusivity. Early part of next year is when company wants to launch it.
Optimistic about getting Goa EIR resolved at the earliest.
US FDA have expedited approvals. Have got about 120 odd products but expect
about 200 odd to be cleared, launches with next two-three years.
Regarding Ekta: Renvela Generic, expect approvals but think it will be first
quarter of next year launch.
Few interesting products lined up for next year. Renvela and Levothyroxine good
products. All potential launches for FY19. However, think FY20 could be much
better for company.
Committed to developing specialty franchise especially women health portfolio.
Also looking at the pediatric space.
Possible to fund deal via internal accruals. Should be looking at funding from
outside as have the capacity to raise money on balance sheet.
2. COAL INDIA: Confident of achieving 600mt production target
in FY18; Gopal Singh, Chairman
n
n
n
n
n
n
n
Wage agreement has been unique. Main thrust has been to provide reliable and
affordable power for all.
Outgo on account of wage increase will be 100 percent compensated by
improvement in production.
Major part of the wage bill has been provided for.
FY18 capex target at Rs 8,500 crore.
Don’t want to comment on wage revision.
Confident of achieving 600 million tonne (mt) production target in FY18.
October growth till date is at 11 percent and growth for September is at 10
percent.
3. CENTURY PLY: See 25% revenue growth in fy19; entering
laminated flooring tiles & doors; Keshav Bhajanka, ED
n
n
n
n
n
n
n
New medium-density fibreboard (MDF) plant will add Rs 150 crore in FY18 itself.
EBITDA margin in MDF seen around 30 percent. Will see Rs 400 crore revenue
from MDF in FY19.
Early festive season a drag as construction slows down.
Company entering into laminated flooring tiles and doors.
See 25 percent revenue growth in FY19.
Demand situation hasn’t improved. However, shift from unorganised sector has
begun to happen.
Have started gaining market share in the sector.
13 October 2017
16

4. LAKSHMI VILAS BANK: Loan growth will remain at current
levels for fy18
n
n
n
n
n
Bank in the midst of raising capital. Retail book doing particularly well.
Improvement in net interest margins (NIMs) and net interest incomes (NIIs)
because liability franchise has been doing well.
Expect steady set of NIMs to be in the range of 2.7-3 percent.
Board has approved capital raising of Rs 800 crore through rights issue.
Bank has exposure to nine accounts of the top 12 accounts sent to Insolvency
and Bankruptcy Code (IBC). Don’t have too much of concern there.
Loan growth will remain at current levels of 14 percent for FY18. Don't
anticipate a sharp increase in credit growth after capital raising.
13 October 2017
17

From the think tank
1. India’s GDP: deflating the right way
n
A unending debate on the gross domestic product (GDP) growth numbers brought
out by the Central Statistics Office (CSO) has been doing the rounds. In 2014-15,
the CSO updated the methodology of calculating various macroeconomic
parameters produced in the National Accounts Statistics (NAS), in sync with the
System of National Accounts (SNA) (2008), which is the internationally agreed,
standard set of recommendations on compiling measures of economic activity.
However, there is a mismatch between recent trends in the growth rate and an
array of high-frequency macroeconomic growth indicators. In light of this, I
discuss the shortcomings of the deflation methodology used to calculate growth
rates. There are two methodologies for deflating the current price GVA (gross
value added) numbers to their constant price equivalents: single deflation and
double deflation. While the single deflation method argues for one-time series
proxy deflator for both input and output at the current price, the double deflation
method involves using a different deflator for output and input, for obtaining
values of output and GVA at constant prices.
2. On oil, Narendra Modi government is more responsive, but
many outstanding issues remain
n
The government, it has to be said, has come a long way since last year, when
exploration had ground to a halt due to unremunerative prices of natural gas
and the industry facing all manner of tax and other issues, including non-
renewal of mining licenses—see graphic on declining private sector investments.
Today, with RIL-BP having announced a $6 bn investment in the KG Basin, things
look quite different. This optimism was reflected in the meeting prime minister
Modi had with various global oil and gas companies this week, and some like
Saudi Aramco have already talked of large investments after the meeting;
Russia’s Rosneft, similarly, has just sealed a $12.9 bn acquisition of Essar Oil.
While both these are in the refining/marketing space where India is an
attractive market—from 4.5mn bpd today, oil demand will rise to 7.5 mn bpd by
2030 and gas from 56bcm to 100bcm—the real issue is whether there will be
enough investment in exploration where Modi’s target is reducing India’s
import-intensity by 10% over the next five years.
3. A ‘Regulatory Lab’ for financial inclusion
n
In a recent report, the Reserve Bank of India's (RBI) household finance
committee found the average Indian household keeps just 5% of its wealth in
financial assets. Most is held in real estate and gold. When borrowing, Indian
households are nearly as avoidant of formal financial services. In times of
emergency, half of households turn to family, friends and moneylenders. The
July 2017 report, “Indian Household Finance”, found many barriers to
participating in the formal financial system. While some of these barriers are
cultural, such as low trust in financial institutions, many are supply-side frictions.
Banks’ “one-size-fits-all” products don’t account for the complexity of Indians’
financial lives, and transaction costs are high. While Indians’ low participation in
the formal financial sector is unusual compared with households in other
countries, these supply-side frictions are not. Globally, technological innovation
is bringing more customized solutions to market for underserved households.
13 October 2017
18

International
4. Three scenarios for the global economy
n
For the last few years, the global economy has been oscillating between periods
of acceleration (when growth is positive and strengthening) and periods of
deceleration (when growth is positive but weakening). After over a year of
acceleration, is the world headed toward another slowdown, or will the
recovery persist? The current upswing in growth and equity markets has been
going strong since the summer of 2016. Despite a brief hiccup after the Brexit
vote, the acceleration endured not just Donald Trump’s election as US
president, but also the heightening policy uncertainty and geopolitical chaos
that he has generated. In response to this apparent resilience, the International
Monetary Fund, which in recent years had characterized global growth as the
“new mediocre,” recently upgraded its World Economic Outlook.
13 October 2017
19

Click excel icon
for detailed
valuation guide
Rs
Valuation snapshot
P/E (x)
P/B (x)
ROE (%)
FY17 FY18E FY17 FY18E FY17 FY18E FY19E
24.8
27.5
23.8
49.5
44.6
18.5
51.1
46.0
35.1
25.3
22.1
24.7
44.2
31.8
21.2
59.3
29.0
34.2
27.0
30.1
24.5
32.0
17.5
19.8
36.3
NM
39.4
43.4
12.6
25.0
29.8
23.2
NM
16.2
34.1
9.3
NM
21.5
845.8
15.7
92.6
60.9
47.6
30.7
25.1
18.0
64.4
37.5
18.4
38.8
17.0
27.1
23.5
21.8
35.4
39.0
18.3
37.8
36.5
18.9
23.0
20.2
19.3
24.0
27.7
21.0
46.1
25.4
24.0
22.5
89.3
21.9
26.6
18.5
21.3
28.2
19.0
32.6
30.0
16.9
19.8
24.3
14.5
NM
10.1
8.1
7.9
6.7
22.9
17.2
14.0
16.4
43.0
33.5
23.1
20.6
14.1
52.7
33.6
15.1
29.6
15.7
4.6
6.0
5.4
7.3
7.3
2.9
15.9
8.8
3.5
3.5
7.4
3.1
2.7
6.6
2.5
13.7
4.9
2.3
2.8
2.3
2.3
5.4
2.0
1.4
5.3
0.7
5.1
4.6
1.2
3.9
3.4
0.9
0.6
0.6
0.5
0.9
0.3
0.7
1.2
0.4
0.8
11.7
5.6
3.2
4.2
2.1
19.3
6.9
4.4
4.6
3.1
4.0
5.3
4.8
6.4
6.6
2.5
12.0
7.3
3.0
3.2
6.4
2.8
2.5
5.7
2.2
11.2
4.4
2.2
2.3
2.2
1.9
4.7
1.8
1.3
4.6
0.7
4.6
3.2
1.2
3.4
3.0
0.9
0.6
0.6
0.5
0.8
0.3
0.7
1.1
0.4
0.8
6.9
4.6
2.9
3.6
1.9
15.8
6.3
3.9
4.0
2.7
20.3
23.1
25.3
16.2
15.8
16.9
37.1
20.8
10.6
13.9
35.7
14.2
6.4
20.3
9.8
25.6
17.1
6.9
10.8
9.5
9.9
18.3
10.2
7.2
15.4
-27.0
13.8
12.3
9.0
18.9
11.5
4.0
-6.7
4.2
1.4
10.1
-8.4
3.6
-0.2
2.7
0.9
21.6
15.1
12.0
18.0
14.4
32.5
18.9
25.5
12.4
19.4
15.8
23.8
23.2
19.3
17.8
14.8
36.1
21.8
17.3
13.8
34.0
13.5
10.8
20.4
11.0
26.7
17.2
9.3
11.4
2.5
10.0
18.8
8.6
6.3
17.3
3.5
15.0
13.0
6.7
18.3
12.4
6.1
-5.2
6.2
5.8
10.9
4.6
3.2
7.0
3.0
4.6
20.1
15.1
13.2
18.6
14.1
33.0
18.6
27.6
14.7
18.2
17.7
27.0
25.3
22.9
20.5
17.3
36.4
24.0
18.3
14.8
31.4
14.3
11.5
23.0
27.4
34.2
22.6
14.7
11.8
8.6
10.5
19.7
9.3
6.9
18.5
7.2
16.3
13.3
12.6
19.5
14.2
12.4
3.0
9.1
7.3
11.2
5.4
5.9
11.4
6.1
8.3
20.2
22.4
15.0
19.2
15.6
31.8
17.8
30.6
18.5
18.5
Company
Automobiles
Amara Raja
Ashok Ley.
Bajaj Auto
Bharat Forge
Bosch
CEAT
Eicher Mot.
Endurance Tech.
Escorts
Exide Ind
Hero Moto
M&M
Mahindra CIE
Maruti Suzuki
Tata Motors
TVS Motor
Aggregate
Banks - Private
Axis Bank
DCB Bank
Equitas Hold.
Federal Bank
HDFC Bank
ICICI Bank
IDFC Bank
IndusInd
J&K Bank
Kotak Mah. Bk
RBL Bank
South Indian
Yes Bank
Aggregate
Banks - PSU
BOB
BOI
Canara
IDBI Bk
Indian Bk
OBC
PNB
SBI
Union Bk
Aggregate
NBFCs
Bajaj Fin.
Bharat Fin.
Capital First
Cholaman.Inv.&Fn
Dewan Hsg.
GRUH Fin.
HDFC
Indiabulls Hsg
L&T Fin Holdings
LIC Hsg Fin
Reco
Buy
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
Neutral
Buy
Not Rated
Buy
Buy
Buy
CMP
(INR)
TP
% Upside
EPS (INR)
(INR) Downside FY17 FY18E FY19E
23
16
14
12
8
17
17
14
5
36
3
18
19
34
3
28.0
4.6
132.3
13.1
473.1
93.3
612.7
23.5
20.0
8.1
169.1
54.3
5.4
248.6
19.8
11.7
25.6
32.9
5.3
7.0
144.4 174.3
18.3
25.5
540.8 698.6
94.2 126.8
826.7 1,119.2
29.6
39.3
37.1
45.8
8.9
10.8
185.0 197.1
69.5
81.7
9.9
11.8
285.5 381.7
20.0
61.3
15.1
24.5
693
854
125
145
3,154 3,589
648
726
21,108 22,781
1,729 2,029
31,285 36,487
1,081 1,229
700
732
206
279
3,742 3,868
1,339 1,585
237
-
7,904 9,417
420
562
696
719
Neutral
Neutral
Buy
Buy
Buy
Buy
Neutral
Buy
Neutral
Buy
Buy
Buy
Buy
525
189
152
118
1,815
268
59
1,743
73
1,058
516
31
365
524
188
212
139
2,066
366
56
1,948
91
1,197
651
36
446
0
0
40
18
14
37
-6
12
24
13
26
15
22
15.4
7.0
5.0
4.8
56.8
15.3
3.0
47.9
-31.3
26.8
11.9
2.5
14.6
21.8
8.4
1.7
5.4
68.2
14.5
2.8
61.9
3.9
32.4
17.2
1.9
18.5
38.1
10.4
6.1
6.8
82.6
16.6
3.2
76.8
8.3
41.0
22.5
3.8
22.9
Buy
Neutral
Neutral
Neutral
Buy
Neutral
Buy
Buy
Neutral
139
133
304
52
273
114
134
252
127
217
141
323
49
333
150
184
341
135
57
6
6
-5
22
32
38
36
7
6.0
-14.8
18.8
1.5
29.3
-31.6
6.2
0.3
8.1
9.5
-11.2
30.1
6.4
34.4
17.1
5.8
14.6
9.0
20.8
6.6
47.0
8.6
38.3
21.4
11.0
26.8
19.1
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Neutral
1,952
1,000
758
1,154
533
524
1,755
1,272
203
651
2,300
900
925
1,400
690
490
2,020
1,450
230
730
18
-10
22
21
29
-7
15
14
13
12
32.0
21.0
24.6
46.0
29.6
8.1
46.8
69.0
5.2
38.2
45.4
29.9
32.8
56.0
37.7
9.9
52.2
84.2
6.8
41.6
62.9
54.9
42.4
68.1
47.1
11.7
58.2
105.6
10.1
48.9
13 October 2017
20

Company
Manappuram
M&M Fin.
Muthoot Fin
PNB Housing
Repco Home
Shriram City Union
STF
Aggregate
Capital Goods
ABB
Bharat Elec.
BHEL
Blue Star
CG Cons. Elec.
CG Power & Indu.
Cummins
GE T&D
Havells
K E C Intl
L&T
Pennar Eng.
Siemens
Solar Ind
Suzlon Energy
Thermax
Va Tech Wab.
Voltas
Aggregate
Cement
Ambuja Cem.
ACC
Birla Corp.
Dalmia Bharat
Grasim Inds.
India Cem
J K Cements
JK Lakshmi Ce
Ramco Cem
Orient Cem
Prism Cem
Shree Cem
Ultratech
Aggregate
Consumer
Asian Paints
Britannia
Colgate
Dabur
Emami
Godrej Cons.
GSK Cons.
HUL
ITC
Jyothy Lab
Marico
Reco
Not Rated
Buy
Buy
Buy
Buy
Buy
Buy
CMP
(INR)
102
422
495
1,500
642
1,982
1,102
TP
% Upside
EPS (INR)
(INR) Downside FY17 FY18E FY19E
-
8.6
9.2
9.7
481
14
7.1
13.9
17.8
550
11
29.5 38.7
44.4
1,750
17
31.6 48.1
65.1
800
25
29.1 33.7
38.4
2,700
36
84.3 118.3 155.3
1,320
20
55.6 80.0 102.4
P/E (x)
P/B (x)
ROE (%)
FY17 FY18E FY17 FY18E FY17 FY18E FY19E
11.8 11.1
2.6
2.4
24.0 22.3 21.4
59.5 30.4
3.8
3.5
6.5
12.0 14.2
16.8 12.8
3.0
2.6
19.4 21.8 21.2
47.4 31.2
4.6
4.1
13.8 13.8 16.6
22.0 19.0
3.5
3.0
17.4 17.1 16.7
23.5 16.8
2.6
2.3
11.7 14.6 16.8
19.8 13.8
2.2
2.0
11.7 15.0 16.9
31.4 25.3
5.0
4.3
16.1 17.1 18.0
69.0
26.8
63.2
61.3
45.1
19.1
33.8
66.7
55.5
25.6
27.0
14.0
69.9
48.7
24.9
29.9
19.6
34.6
34.6
56.8
48.2
35.4
70.2
16.8
31.8
28.9
55.1
25.3
NM
396.7
48.2
40.8
36.9
55.2
61.9
52.3
44.9
42.4
51.5
32.0
63.1
31.8
34.7
50.9
60.7
25.1
31.1
46.2
41.9
38.6
32.4
41.1
49.4
23.3
24.6
10.9
57.5
41.4
17.9
30.6
16.9
31.9
30.4
39.9
34.2
24.7
43.2
16.1
23.8
24.5
39.4
25.2
34.5
31.1
36.6
42.6
31.3
52.3
53.4
45.4
42.1
41.8
45.2
31.6
54.0
28.8
39.6
46.9
8.8
5.5
1.0
10.0
24.5
1.2
6.6
9.5
10.1
4.9
3.2
1.4
6.5
8.9
-1.4
4.1
3.2
5.4
3.9
2.9
3.8
2.4
4.9
1.7
1.1
3.9
3.3
4.4
3.2
5.7
8.4
4.5
3.5
14.6
20.3
23.7
11.8
14.5
12.5
6.7
41.3
7.2
6.5
17.8
7.7
4.3
0.9
9.4
18.1
1.1
6.1
8.3
9.1
4.2
2.9
1.3
5.7
7.6
-1.6
3.7
2.8
4.8
3.5
2.7
3.6
2.2
4.4
1.5
1.0
3.4
3.0
3.8
2.9
4.9
6.9
4.2
3.2
13.3
16.7
22.5
10.1
12.4
9.7
6.6
40.9
7.1
6.5
15.2
12.7
20.6
1.5
18.0
76.4
6.2
21.2
12.4
18.2
21.2
12.5
10.2
9.3
19.8
NM
14.3
16.8
18.0
11.2
5.1
7.9
7.1
7.2
10.8
3.4
14.4
6.1
19.0
-3.2
1.4
18.4
11.6
9.4
28.5
36.9
50.4
28.4
35.8
24.6
22.2
66.5
23.5
21.1
36.7
12.6
17.1
3.1
20.9
49.7
3.0
19.7
21.5
18.3
19.5
12.4
11.6
9.8
19.8
-8.8
12.7
17.6
15.8
11.6
7.0
10.8
9.2
10.7
10.0
4.4
14.8
8.0
16.1
8.8
17.0
20.8
10.1
10.2
26.7
34.3
50.8
26.0
32.0
24.2
21.1
76.2
24.8
16.5
34.9
15.8
17.0
4.1
28.9
48.8
3.7
22.8
22.7
20.9
20.9
13.8
12.6
13.8
20.9
-11.0
12.8
17.4
16.0
13.1
7.9
13.5
12.2
13.3
12.9
6.1
17.5
12.3
17.5
12.8
22.9
18.8
14.0
12.4
28.1
34.5
58.2
26.3
33.9
22.8
22.6
87.2
26.3
18.4
37.7
Sell
Buy
Sell
Neutral
Buy
Neutral
Buy
Neutral
Neutral
Neutral
Buy
Not Rated
Neutral
Neutral
Not Rated
Neutral
Buy
Sell
1,360
169
85
789
211
79
895
382
531
304
1,143
99
1,246
1,003
16
921
584
535
1,235
187
75
690
240
80
1,170
395
460
295
1,400
-
1,355
900
-
840
800
470
-9
11
-11
-13
14
2
31
3
-13
-3
23
9
-10
-9
37
-12
19.7
6.3
1.3
12.9
4.7
4.1
26.5
5.7
9.6
11.9
42.3
7.1
17.8
20.6
0.6
30.8
29.8
15.5
22.4
6.7
2.7
17.1
5.0
2.0
27.7
9.3
10.7
13.1
46.5
9.1
21.7
24.2
0.9
30.1
34.6
16.8
31.6
7.4
3.8
25.5
6.3
2.5
35.0
11.3
13.9
16.4
56.6
11.2
33.4
30.0
1.0
33.4
39.8
19.1
Buy
Neutral
Buy
Buy
Neutral
Neutral
Buy
Buy
Buy
Buy
Buy
Buy
Buy
278
317
1,742 1,706
1,010 1,150
2,722 3,272
1,137 1,276
179
198
975
1,196
384
485
690
832
153
182
108
140
18,536 22,084
3,922 4,937
14
-2
14
20
12
11
23
26
21
19
29
19
26
4.9
7.0
36.1 51.0
28.5 40.9
38.8 62.9
67.8 70.6
5.6
7.5
33.7 39.7
7.0
9.7
27.3 27.4
-1.6
4.4
0.3
3.5
384.4 507.1
96.1 92.1
8.2
66.9
58.9
88.3
101.2
10.8
54.4
16.4
34.4
7.1
5.6
547.8
138.8
Neutral
Buy
Buy
Neutral
Buy
Neutral
Neutral
Buy
Neutral
Neutral
Neutral
1,160
4,558
1,110
325
1,124
974
5,000
1,238
267
389
320
1,315
5,165
1,385
330
1,400
1,005
4,630
1,400
290
410
350
13
13
25
1
25
3
-7
13
9
5
9
21.0 22.2
73.7 85.3
21.2 24.5
7.2
7.7
26.5 26.9
18.9 21.5
156.1 158.1
19.6 22.9
8.4
9.3
11.2
9.8
6.3
6.8
26.5
104.6
29.8
9.1
33.1
24.7
182.1
27.4
10.3
11.1
8.2
13 October 2017
21

Company
Nestle
Page Inds
Parag Milk
Pidilite Ind.
P&G Hygiene
Prabhat Dairy
United Brew
United Spirits
Aggregate
Healthcare
Alembic Phar
Alkem Lab
Ajanta Pharma
Aurobindo
Biocon
Cadila
Cipla
Divis Lab
Dr Reddy’s
Fortis Health
Glenmark
Granules
GSK Pharma
IPCA Labs
Jubilant Life
Lupin
Sanofi India
Shilpa Medicare
Strides Shasun
Sun Pharma
Syngene Intl
Torrent Pharma
Aggregate
Logistics
Allcargo Logistics
Blue Dart
Concor
Gateway
Distriparks
Gati
Transport Corp.
Aggregate
Media
Dish TV
D B Corp
Den Net.
Ent.Network
Hind. Media
HT Media
Jagran Prak.
Music Broadcast
PVR
Siti Net.
Sun TV
Zee Ent.
Reco
Neutral
Buy
Neutral
Neutral
Neutral
Not Rated
Buy
Neutral
CMP
TP
% Upside
(INR) (INR) Downside
7,381 6,160
-17
18,643 21,310
14
269
280
4
806
865
7
8,608 9,200
7
148
-
851
980
15
2,448 2,600
6
FY17
118.0
238.7
3.6
16.7
132.9
3.5
8.7
26.7
EPS (INR)
FY18E FY19E
115.0 133.6
294.7 398.4
9.1
12.5
18.1
20.6
151.6 176.0
3.5
6.4
9.9
14.0
34.5
51.5
P/E (x)
FY17 FY18E
62.6 64.2
78.1 63.3
74.5 29.5
48.2 44.6
64.8 56.8
41.9 42.5
98.0 86.0
91.6 71.0
46.5 42.0
22.9
24.2
19.8
19.0
36.4
35.3
37.1
22.1
32.8
14.5
15.4
18.6
70.6
31.2
17.9
18.7
32.9
49.7
26.8
20.6
37.7
23.2
24.0
16.8
40.7
35.7
35.0
13.6
16.1
30.5
70.3
18.4
NM
69.2
9.6
12.9
16.8
62.1
65.8
NM
31.9
37.3
25.0
25.3
21.9
16.6
38.2
28.6
28.0
26.1
32.8
68.8
15.2
16.8
51.9
30.2
14.1
25.6
31.8
33.0
18.2
35.8
30.4
23.9
26.7
16.1
32.1
32.0
27.1
7.2
12.9
25.8
71.0
15.8
NM
64.9
8.7
13.0
14.7
42.8
50.9
NM
27.6
42.6
P/B (x)
ROE (%)
FY17 FY18E FY17 FY18E FY19E
23.6 22.0 39.0 35.5 38.1
31.2 25.1 40.0 39.6 43.1
3.4
3.1
6.0
11.0 13.3
12.5 10.2 28.2 25.2 23.5
40.6 33.7 39.3 64.9 62.8
2.1
2.0
5.2
4.9
8.5
9.6
8.8
10.2 10.7 13.6
18.4 12.8 21.3 18.0 20.3
12.8 11.9 27.5 28.3 29.3
4.9
5.2
6.5
4.7
4.6
7.4
3.8
4.4
3.2
1.6
3.8
3.4
10.2
2.6
3.0
3.5
5.6
6.1
2.8
3.5
7.6
5.0
4.0
2.3
18.1
3.7
2.5
1.9
2.5
3.7
15.7
4.3
1.8
4.4
1.6
1.0
2.7
4.2
6.5
4.0
7.8
5.8
4.3
4.5
5.2
3.7
4.2
6.2
3.4
4.5
3.1
1.4
3.1
2.4
11.9
2.4
2.5
3.2
5.3
5.2
2.5
3.4
6.2
4.4
3.6
2.0
13.8
3.6
2.4
1.7
2.1
3.5
12.8
3.6
2.0
4.1
1.3
0.9
2.7
3.8
5.8
4.3
7.1
5.4
23.0
23.4
37.7
27.6
12.3
23.0
10.2
22.0
9.7
11.3
24.7
21.1
14.5
8.6
18.1
20.9
17.1
14.4
10.7
18.1
22.2
23.8
16.9
13.7
50.5
10.8
7.3
12.4
16.7
12.3
25.1
25.1
-19.1
6.7
18.2
7.9
18.5
11.2
10.4
-28.7
26.0
19.3
18.4
19.0
26.5
24.8
11.1
23.5
12.1
17.0
9.7
2.1
20.3
17.7
23.0
8.2
19.5
13.2
16.6
17.0
14.7
9.6
22.5
19.5
13.6
13.4
48.6
11.4
9.2
19.4
17.8
13.5
19.9
24.7
-6.4
6.6
16.5
7.3
18.6
9.3
12.1
-7.5
27.0
14.7
20.5
20.9
25.9
22.1
14.5
26.0
13.2
19.5
14.4
4.9
20.4
18.8
30.9
12.2
19.6
16.4
18.1
20.4
20.2
13.8
20.7
21.5
16.1
15.1
46.8
12.4
12.1
25.4
18.6
15.1
35.2
23.9
0.2
10.3
16.6
7.3
19.0
12.4
17.3
6.4
31.6
18.7
Neutral
Neutral
Buy
Buy
Sell
Buy
Neutral
Neutral
Neutral
Buy
Neutral
Buy
Neutral
Neutral
Buy
Buy
Buy
Buy
Buy
Buy
Not Rated
Neutral
494
1,831
1,156
745
371
501
590
883
2,380
150
604
134
2,427
501
662
1,060
4,247
697
864
539
491
1,279
510
1,830
1,605
850
330
555
520
720
2,400
220
775
200
2,500
430
905
1,125
4,850
805
1,300
515
-
1,350
3
0
39
14
-11
11
-12
-18
1
47
28
49
3
-14
37
6
14
16
50
-5
6
21.6 19.8
75.7 72.5
58.4 52.8
39.3 44.9
10.2
9.7
14.2 17.5
15.9 21.1
39.9 33.9
72.6 72.6
10.3
2.2
39.3 39.7
7.2
8.0
34.4 46.8
16.1 16.6
37.0 47.1
56.6 41.4
129.1 133.6
14.0 21.1
32.3 47.4
26.1 15.1
13.0 16.1
55.2 53.4
25.5
93.3
64.2
50.0
14.2
23.6
26.0
40.4
119.9
5.6
49.1
11.0
54.9
26.8
56.7
58.0
160.6
30.4
74.8
23.3
18.0
67.3
Buy
Not Rated
Neutral
Buy
Not Rated
Not Rated
165
4,177
1,357
238
114
272
206
-
1,214
280
-
-
25
-11
18
9.8
10.3
102.5 129.9
38.0 42.4
6.8
8.4
16.9
8.8
15.9
21.0
12.9
163.2
48.6
12.2
23.9
25.9
Buy
Buy
Neutral
Neutral
Buy
Neutral
Buy
Buy
Buy
Neutral
Neutral
Buy
72
375
86
791
247
95
179
399
1,350
25
793
517
106
450
90
928
350
90
225
469
1,597
32
860
630
47
20
4
17
42
-6
26
18
18
29
8
22
1.0
20.4
-9.3
11.4
25.8
7.4
10.7
6.4
20.5
-1.8
24.9
13.9
1.0
23.7
-2.9
12.2
28.5
7.3
12.2
9.3
26.5
-0.4
28.8
12.2
2.4
28.0
0.1
20.6
33.6
7.8
13.4
14.0
43.6
0.4
36.9
17.8
13 October 2017
22

Company
Aggregate
Metals
Hindalco
Hind. Zinc
JSPL
JSW Steel
Nalco
NMDC
SAIL
Vedanta
Tata Steel
Aggregate
Oil & Gas
BPCL
GAIL
Gujarat Gas
Gujarat St. Pet.
HPCL
IOC
IGL
MRPL
Oil India
ONGC
PLNG
Reliance Ind.
Aggregate
Retail
Jubilant Food
Titan Co.
Aggregate
Technology
Cyient
HCL Tech.
Hexaware
Infosys
KPIT Tech
L&T Infotech
Mindtree
Mphasis
NIIT Tech
Persistent Sys
Tata Elxsi
TCS
Tech Mah
Wipro
Zensar Tech
Aggregate
Telecom
Bharti Airtel
Bharti Infratel
Idea Cellular
Tata Comm
Aggregate
Utiltites
Coal India
Reco
CMP
(INR)
TP
% Upside
EPS (INR)
(INR) Downside FY17 FY18E FY19E
P/E (x)
P/B (x)
ROE (%)
FY17 FY18E FY17 FY18E FY17 FY18E FY19E
36.8 31.7
4.9
4.6
13.4 14.5 17.8
30.8
16.0
NM
17.3
23.2
12.0
NM
21.1
18.2
23.1
10.2
19.8
54.8
22.4
11.2
9.6
34.7
8.7
17.9
10.3
22.2
18.1
13.4
13.3
14.1
NM
11.5
19.3
9.1
NM
12.6
10.3
14.7
10.0
16.8
28.2
16.3
9.9
8.1
30.8
12.1
11.9
9.5
17.9
16.0
11.9
2.0
4.3
0.5
2.7
1.6
1.7
0.6
2.0
2.1
1.8
3.1
2.0
7.4
2.5
3.4
1.9
7.3
2.3
1.0
1.0
4.7
1.9
1.8
12.3
13.1
12.7
2.8
3.8
4.9
3.1
1.6
5.1
3.1
2.2
2.1
2.7
9.5
5.7
2.5
2.8
2.3
3.9
1.8
4.6
0.5
2.3
1.6
1.6
0.7
1.8
1.9
1.7
2.6
1.8
6.1
2.2
2.8
1.6
6.2
2.0
0.9
1.0
3.9
1.7
1.6
11.3
12.0
11.7
2.4
3.4
4.2
2.8
1.5
3.9
3.1
2.3
2.0
2.6
7.6
6.1
2.3
2.7
2.0
3.8
2.4
5.2
1.4
10.7
2.7
6.8
7.4
24.4
-7.9
17.3
7.2
12.8
-6.7
9.7
15.7
7.6
32.4
9.6
14.2
11.6
32.4
21.2
21.0
31.4
5.7
10.1
23.2
11.6
13.2
8.2
20.6
17.2
16.2
27.5
26.5
22.0
14.3
40.4
16.8
13.2
13.7
17.0
37.1
32.6
18.4
16.9
17.2
22.9
14.3
31.8
-5.5
21.6
8.3
15.5
-9.1
15.0
19.1
11.5
28.5
11.3
23.9
14.3
31.0
21.9
21.7
17.3
7.9
10.2
23.9
11.7
13.5
11.1
21.0
18.6
16.7
25.5
25.6
19.6
13.3
33.3
17.2
14.4
14.7
17.7
33.6
30.7
17.9
16.2
14.9
22.8
15.4
37.9
0.6
20.8
10.1
16.2
-5.3
20.3
15.9
14.1
25.2
11.9
27.0
14.1
24.2
17.4
20.4
16.5
8.8
10.5
25.5
12.1
13.0
14.0
22.2
19.6
17.4
24.6
23.1
19.1
14.7
28.3
20.1
16.2
16.0
20.6
32.4
33.3
17.1
16.4
17.9
22.0
1.9
23.2
-32.6
33.1
0.3
47.7
Buy
Neutral
Buy
Buy
Neutral
Buy
Sell
Buy
Neutral
264
315
162
256
86
119
56
320
691
308
322
192
298
87
188
30
360
665
17
2
19
16
1
57
-47
13
-4
8.6
19.7
-20.9
14.8
3.7
10.0
-6.2
15.1
37.9
19.8
22.4
-17.4
22.3
4.5
13.1
-7.7
25.4
66.9
24.5
29.3
2.0
25.7
5.8
12.9
-4.2
37.5
63.4
Buy
Sell
Sell
Neutral
Buy
Buy
Neutral
Sell
Buy
Buy
Buy
Neutral
491
446
889
197
456
415
1,524
129
347
170
253
873
644
634
712
180
585
559
1,295
112
340
190
275
938
31
42
-20
-9
28
35
-15
-13
-2
12
9
8
48.3
22.6
16.2
8.8
40.7
43.0
44.0
14.8
19.3
16.4
11.4
48.3
49.2
26.5
31.6
12.1
45.9
51.1
49.6
10.7
29.1
17.8
14.1
54.7
52.0
30.0
44.0
13.3
42.9
46.5
54.8
11.6
34.1
19.2
18.0
62.6
Sell
Neutral
1,502
624
960
590
-36
-5
10.0
9.0
14.8
10.5
20.7
12.6
150.1 101.4
69.0 59.6
73.9 62.5
17.1
15.3
20.0
14.7
10.9
14.6
19.3
16.2
16.1
17.4
30.3
19.1
15.3
17.3
14.3
17.0
14.6
14.4
17.6
14.9
12.0
13.3
16.9
15.7
14.2
15.3
25.2
19.3
13.6
16.0
14.4
16.8
Buy
Neutral
Neutral
Buy
Neutral
Buy
Neutral
Neutral
Neutral
Buy
Buy
Neutral
Buy
Neutral
Buy
523
913
274